Ebook Social enterprise in Vietnam concept, context and policies present the content: social enterprises concepts; the development of social enterprises in Vietnam; types organisation and legal status of social enterprises in Vietnam; international experiences; analysis of social enterprises situation in Vietnam; recommendations on mechasism, policies for development of social enterprises in Vietnam...
[Type text] SOCIAL ENTERPRISE IN VIETNAM CONCEPT, CONTEXT AND POLICIES HANOI 2012 Unofficial translation version SOCIAL ENTERPRISE IN VIETNAM CONCEPT, CONTEXT AND POLICIES Main authors : Nguyễn Đình Cung Lưu Minh Đức Phạm Kiều Oanh Trần Thị Hồng Gấm Hanoi, 2012 Unofficial translation version Copy Rights This research report has been completed by the Central Institute of Economic Management (CIEM) with valuable support from Centre for Social Initiatives Promotion (CSIP), under a funded project of the British Council Vietnam They should be best dedicated for any achievements of this research The views expressed in this report are those of the authors and not necessarily reflect the views of the above organizations This research report contains Intellectual Property Rights which are owned by the British Council Copy or reproduction of this research report can only be carried out with prior written agreement from British Council British Council Vietnam The British Council is the UK’s international cultural relations body, working in over 100 countries worldwide We build engagement and trust for the UK by exchanging knowledge and ideas between people worldwide The cultural relations hereby means to enable people around the world to share, create, learn and develop economic and cultural opportunities that deliver greater prosperity and security for everybody Across Vietnam we work in partnership with government, companies, institutions, not-for-profit organisations and the public, providing economic and cultural opportunities in a wide range of areas: from English to higher education, from schools to social innovation, and from creativity to climate change We work with partners from the very beginning of an idea so that what we together meets both our needs Making a difference in Vietnam English: Transforming the teaching and learning of English for over one million learners of English by working in partnership with the Ministry of Education and Training (MoET) and by drawing upon our teaching centres’ reputation for excellence and quality Higher education: Supporting international collaboration in higher education, research and innovation by working with education institutions in both Vietnam and the UK Qualifications: Providing better access to academic and employment opportunities for more than 20,000 people a year by administering internationally recognised qualifications Skills: Improving employment prospects for thousands of students by working with the Vietnamese Government, colleges and business sector to develop international-standard vocational and technical education programmes Schools: Developing trust and understanding between young people as global citizens by creating international school partnerships that provide a global dimension to teaching and learning for more than 5,000 students and teachers in Vietnam Arts: Increasing awareness in Vietnam and the UK of each other’s creativity and innovation and creating opportunities for UKVietnam artistic collaborations by working in partnership with government, the UK and Vietnam arts communities Climate change: Raising awareness of the need to reduce the impact of climate change by identifying 30 young climate champions in Vietnam, connecting them with others from around the world, and assisting them to develop projects which will help combat its effects Social innovation: Supporting the social and economic development of Vietnam by connecting Vietnamese individuals, communities, business and government with UK expertise in relevant areas such as social enterprise and media Unofficial translation version CONTENTS INTRODUCTION 07 SUMMARY 09 PART I WHAT ARE SOCIAL ENTERPRISES? 12 1.1 SOCIAL ENTERPRISES CONCEPTS 12 1.1.1 Brief on the evolution and development of Social Enterprises (SE) 12 1.1.2 Different viewpoints on social enterprises concept 16 1.1.3 Typical characteristic of social enterprises 20 1.1.4 Social Enterpriese in the relation with other organisations and socia trends 27 1.2 THE DEVELOPMENT OF SOCIAL ENTERPRISES IN VIETNAM 1.2.1 Before Đổi (1986) 39 1.2.2 From 1986 - 2010 40 1.2.3 From 2010 - to date 43 1.2.4 A brief on the structure of Social Enterprises sector in Vietnam 47 1.3 TYPES ORGANISATION AND LEGAL STATUS OF SOCIAL ENTERPRISES IN VIETNAM 50 1.3.1 Type of social enterprises in Vietnam to date 51 1.3.2 Some organisations that can be transferred to social enterprises model………… 60 PART II: HOW TO DEVELOP SOCIAL ENTERPRISES IN VIETNAM? 67 2.1 INTERNATIONAL EXPERIENCES…………………… ………………………… 67 2.1.1 The United Kingdom 67 2.1.2 The United State 74 2.1.3 Korea 78 2.1.4 Thailand 81 2.1.5 Singapore 89 2.2 ANALYSIS OF SOCIAL ENTERPRISES SITUATION IN VIETNAM 91 2.2.1 Difficulty that social enterprises currently facing in Vietnam 91 2.2.2 Social issues and resources in Vietnam: Opportunities and Challenges 102 Unofficial translation version 2.3 RECOMMENDATIONS ON MECHASISM, POLICIES FOR DEVELOPMENT OF SOCIAL ENTERPRISES IN VIETNAM 107 2.3.1 Finding an official concept for Social Enterprises in Vietnam 107 2.3.2 Institutionalisation of social enterprises in Vietnam 110 2.3.3 Measures to encourage and support social enterprises in Vietnam 113 CONCLUSION 116 REFERENCES 1208 Unofficial translation version LIST OF IMAGES Image Typical hybrid of social enterprises Image Bottom of Pyramid Group Image Positioning Social Enterprises Image Assessment criterias of impact of Social Enterprises Image Components of CSR Image Some typical Fair Trade trademark Image Social activities matrix Image Organizational forms/ legal status of 167 Social Enterprises participated in the mapping exercise Image Top five social enterprise operating areas Image 10 Ecosystem of the UK social enterprirses Image 11 Some milestone in policies of Thai government for Social Enterprises Image 12 Assets structure of social enterprises Image 13 The connecting role of Social Enterprises and state policies Image 14 Modern perspectives on national balance sheet Image 15 State needs to develop the third sector, including social enterprises LIST OF BOXES Box Ashoka- Innovators for the Public Box Grameen Bank – A typical model of social enterprise Box Skoll Foundation Box Hanoi Business and Management University: A Cooperative of Intelligencia Box Congratulations for being classified as poor Box Tears… Charity Box British Ambassador – ODA for Vietnam will decrease Box Humanitarian Cooperative Box Research and Training Centre for Community Development Box 10 Hoa Sua Tourism Economics High School Box 11 The Centre for Social Initiatives Promotion (CSIP) Box 12 The Will to Live Centre Box 13 Mai Vietnamese Handicrafts- MVH Box 14 Tò he Stock company Box 15 Clan bookcase model Box 16 KOTO International Box 17 Microfinance – CEP Fund Box 18 An Dien baterry factory Box 19 SOE doing public work: "Disabled" market Box 20 LGT venture Philanthropies Unofficial translation version LIST OF TABLES Table Comparision between Social Enterprises, NGO and traditional enterprises Table Comparision some social impact index between Social Enterprises and traditional enterprises Table The size and average economic efficiency of different types of organisations Table Social enterprises “Nest” in Vietnam LIST OF ABBREVIATIONS ADB Asean Development Bank BC British Council BoP Bottom of Pyramid Group CIC Community Interest Company (UK) CIEM Central Institute for Economic Management CP Stock Company CSIP Centre for Social Initiatives Promotion CSR Corporate Social Responsibility DFID Department for International Development (UK) DNNN State Enterprise DNXH Social Enterprise DNhXH Social Enterpreneur FLO Fair Trade Labelling Organisation FT Fair Trade HDI Human Development Index HTX Cooperatives IFAD International Fund for Agriculture Development L3C Low profit Limited Liability Company (America) NFP Not for Profit NGO Non Government Organisation NPO Non Profit Organisation NSNN State budget ODA Official Development Assistant OECD Organization Economic and Development Cooperation OECF Fund Overseas Economic Cooperation (Japan) QLNN State management SROI Social Return on Investment TNDN Enterprise income (Tax) TNHH Limited Company TSEO Thai Social Enterprise Office WB World Bank WWF World Wild Funds Unofficial translation version INTRODUCTION Over the last 20 years, the renovation and open door policy in Vietnam have created favorable conditions for the development of strong business in all non- state economic and social organizations Clearly, businesses have made significant contribution to Vietnam economic achievement and growth, the same with social organizations in implementing various socioeconomic objectives, such as poverty reduction, environmental protection, social justice However, people and the government have been so familiar with these two types of contrasting organizations In fact, influenced by the needs of daily life, many social initiatives have been implemented using business activities as tools to achieving social solutions for the community This model is a Social Enterprise (SEs) In the World, social enterprises have emerged centuries ago, and now has become a major social movements across continents Many countries have policies to encourage, promote social enterprises with a view that State should cooperate and share responsibility with social enterprises to provide welfare achieving greater efficiency In the context of current economic crisis in our country, the Government decides to restructure, undertake fiscal tightening, reduction of government debt, in facing of increasingly complexed social and , environmental issues We believe that it is essential to develop social enterprises in supporting the development of comprehensive and sustainable country Therefore, it is timely now to promote awareness of the society and State about the roles and the significance of social enterprises model It can be seen, social enterprises having many potential advantages, derived from non-profit nature and sustainable social mission of this model Social enterprises can become effective partners of the State, supporting the State to achieve its social objectives On that basis, The Central Institute of Economic Management (CIEM) has partnered with the British Council in Vietnam with support from the Centre for Social Initiatives Promotion (CSIP) in undertaking a study research on the theme: "social Enterprises in Vietnam-concept, context and policy", aimed at two main objectives: (i) promote awareness of social enterprises and (ii) establish the first ground for discussion of development policy for social enterprises in Vietnam The Research Report is also designed with two parts respectively: Part I: a comprehensive understanding of social enterprises concept in the world and in Vietnam; Part II: an analysis of the current situation, the overall context in order to present recommendations for establishment of policies for social enterprises development in Vietnam This report was written by main authors including: Dr Nguyen Dinh Cung, Vice President of the Central Institute for Economic Management, Mr Luu Minh Duc, Researcher, of the Central Institute for Economic Management, Ms Pham Kieu Oanh, Director of the Centre for Social Initiatives Promotion (CSIP) and Ms Tran Thi Hong Gam, Development and Society Manager of the British Council in Vietnam We would like to express our gratitude to Mr Simon Beardow, Deputy Director of the British Council Vietnam and Ms Cao Thi Ngoc Bao, Director of Development and Society programme of the British Council in Vietnam for their effective cooperation and assistance throughout the project in their role of representing the donor We would also like to thank Unofficial translation version colleagues who have involved in writing and implementing the research including: Mr Phan Duc Hieu and Ms Nguyen Minh Thao (Central Institute for Economic Management); Ms Dao Thi Hue Chi, Ms Che Phong Lan (CSIP ); Ms Pham Tran Thuy Tien (British Council) In addition, we wish to thank Madam Pham Chi Lan and Mr Nguyen Quang A, independent economists; Mr Nguyen Hoa Cuong, Deputy Director of Department of Enterprises Development (MPI); Mr Nguyen Quang Vinh, Director of Office for Business sustainable Development (VCCI) for their valuable contribution, comments and criticism supporting the team to finalize the research In order to complete this research, we carried out many study visits in and out the country We visited and interviewed 15 social enterprises in Hanoi, Ho Chi Minh City and Hoi An, Da Nang; met and interviewed 18 social enterprises, representatives of social enterprises association, experts and government officials working in social enterprises sector in Singapore, Indonesia and Thailand; attended events and seminars in Vietnam and conferences and two training workshops on social enterprises in Singapore and Thailand During these visits, we have experienced great cooperation and enthusiasm from the social enterprises Information obtained from these study visits are factual data which is indispensable for this research report Therefore, on this occasion we would like to thank the following social enterprises: KOTO Co Ltd, Viet Pictures Co Ltd, The will to live centre, Morning Star Centre, Tohe Company Ltd, Microventures Bloom Organization, The Marine Gifts Co Ltd, North West Supporting development Ltd, Ecolife, Help Corporation, Mekong Quilts, Mai Handicrafts Co., Ltd., Education Centre for Deaf (CED), Streets International Co., Ltd., Solar Serve Company Ltd We would like to extend our thanks to the following organizations and social enterprises: Lien Centre on Social Initiatives, Social support division-Ministry of Community Development, Youth and Sports, Social enterprises Association, Believe NJ Café, O School (Singapore); British Council, PT Poros Nusantara Utama, ProVisi Education, Mittran Group, Bina Swadaya, Social enterprises - innovation centre and the third sector-Trisakti University, PT Kampoeng Kearifan, Institute Pluralism (Indonesia); Office of social enterprises Thailand, Thammasat University, Change Fusion, Pensook Health, Creative Club, OpenDream, Igenius, Doi Tung coffee (Thailand) The authors would like to thank the British Council in Vietnam for their sponsorship in implementing the research and publish this report! Dr Nguyễn Đình Cung Vice President Central Institute for Economic Management Unofficial translation version SUMMARY Social Enterprises (SEs) have been formed from social initiatives, base on a demand of solving a concrete social problem of the community and led by entrepreneurial spirit of the founders This unique spontaneous and dynamic characteristics resulted in the legging behind of public awareness in comparision with lively development of social enterprises To date, there are nearly 200 organizations in Vietnam are considered having embedded fully typical characteristics of Social Enterprises; the pioneering organisations have been founded since 1990s, however, Social Enterprise concept is still very new in Vietnam What are social enterprises? Social enterprises have been founded firstly in the United Kingdom since 17 centuries In the following centuries, step by step models of micro-finance, cooperatives, social housing, ….have been founded and replicated in East Europe and North America countries However, social enterprises only started to develop strongly and expanded into an international movement of current scale 1980, when there is a replacement of a welfare state model with an innovative view In which, the role of the State has been streamlined, shared and compacted and transfer part of its function of providing social welfare to third sector These are organizations standing in between public sector and private enterprises According to published statistics, by 2005, there were 55,000 social enterprises in the UK generating a total revenue of 27 billion pounds and contributes 8,4 billion pounds per year to the country GDP On a global scale, the social enterprises movement have been flourished, with a typical model of Grameen Bank in Bangladesh and the founder of the bank was awarded the Nobel Prize in 2006 Many countries have officially acknowledged social enterprises and created regulatory framework and promulgate policies to encourage and support social enterprises development in their respective countries so that this sector can support the state to implement social objectives more efficiently Although, the diversity of social enterprises have led to diversified and multi-facetted definitions of social enterprises In general, social enterprises is an organization which have characteristics as follows - place social mission at the top priority - using business activities, fair competition as tools to meet social objectives Re-invest profit generated from business activities into the organisations, communities and social objectives In addition, most social enterprises possess some typical characteristics, such as: (i) a structure of social ownership; (ii) income generated from business activities and sponsorship; (iii) impact is assessed on both economic and social sides; (iv) serving the need of the base of the pyramid groups, who are poor, vulnerable, marginalised (v) initiatives with “bottom up” approach; (vi) open and linkage; (vii) closely associated with social entrepreneurs; (viii) employees of social enterprises’ are social workers (are paid not volunteers) Unofficial translation version are proactive in accessing foreign information, with better foreign languages proficiency, actively taking part in seminars, events, clubs, so they can access modern knowledge of the world, including social enterprises This is the source of "community leaders" for social enterprises in the future That's not to mention the number of students studying abroad, bringing back to Vietnam updated knowledge of the world Typically is the case of Ms Phan Y Ly, a Chevening scholar studied Master degree in the UK, after returning home has set up a project on community art (Art Life) in the spirit of a social enterprises Entrepreneurial spirit: each year, Vietnam has more than 80,000 enterprises register for establishment The number of enterprises in Vietnam are still modest but keep growing The current economic difficulties can undermine business investment in the short term But overall, entrepreneurial spirit of young people of Vietnam is always strong However, it is difficult to say the number of enterprises above can become “in put” for social enterises as the two models differ greatly As previously mentioned, social enterprises might not be able to address the desire of “individuals getting rich' The number of newly registered enterprises only show the use of business, entrepreneurship spirit (creativity, adventure, dynamism, persistent) which have become popular and the 'value' of young people today To get a few hundred out of 80,000 business people to become social enterpreneurs requires other promotional factors such as education, communication, support of intermediaries, incubators of universities, government, state policies Social investment capital: In general, social investment capital market, charity fund are abundant in both domestic and foreign markets For the attraction of social capital from foreign institutions, the problem lies mostly in the capacity of social enterprise to absorb capital and prestige of the social enterprises in country (as mentioned in the difficulty of Social Enterprises) In fact, some social enterprises have attracted and managed international capital very well, typically the Hoa Sua School and KOTO Restaurant To build reputation with foreign partners, social enterprises must possess professional networking skills, modern management processes, demonstrating accountability, openness, transparency Notably, external resources is not only finance Technical assistance, capacity building, certification plays important roles Mai Handicrafts received free support from WFTO on product design, KOTO in their early establishment received foreign volunteers to teach cooking, and especially to become partner that receive Box Hill international certification for training courses Besides the large external capital market, the domestic philanthropic capital is also quite potential Once having real capability and reputation in professional organisation, open and transparent and demonstrate real social effect, many organisations/charitable projects attracted large funding According to our estimates, the average grant amount every month in 2011 for SympaMeals project which provide coupon for free meal and free milk to poor patients at Hospital K is more than 130 million VND / month At a greater scale, Charity fund of Dan Tri ( an on line newspaper) received an average of 467 million/week (from 3rd week, 12/2011,3rd week 3/2012) Thus, the matter lies in the way, that social enterprise operate, their creativity and transparency will determine their ability to successfully access fund 109 Unofficial translation version Some other resources: Social Enterprises can seize the opportunity from the policy framework and state laws in attracting foreign investment (direct and indirect), economic integration policies, bilateral agreements, the market economy The state preferential policies available to various types of cooperatives, non-state establishments, state public services enterprises, nonbusiness units, science and technology organisations should bring about favorable conditions for the operation of these organisations and social enterprises (in case of conversion) In addition, the infrastructure of Vietnam has also been significantly improved The popularisation of information technology, Internet and telecommunications in Vietnam with low cost is an advantage Besides, in terms of natural conditions, our country is located at a good intersection point in Southeast Asia enabling social enterprises to exchange, connect to social enterprise and intermediaries to promote the sector in the region 2.3 RECOMMENDATIONS ON MECHANISM, POLICIES FOR DEVELOPMENT OF SOCIAL ENTERPRISE IN VIETNAM 2.3.1 Finding an official concept for Social Enterprises in Vietnam Of course, there will always exist different and diversed point of views about social enterprises However, to lay a good foundation for institutionalization of policy and support for the development of social enterprise in Vietnam in the future, it is essential to develop an official concept with high level of consensus among relevant stakeholders, on social enterprises in particular context of Vietnam and to be used for specific policies In order to develop an official concept, the following issues should be addressed : - social enterprises is a concept, model or a specific category of organisation? - which are specific objectives for social enterprises from the State standpoint? - social enterprises are only suitable for private sector or it may involve state ownned entities? - the concept of social enterprises must be very clear What are the key characteristics which are compulsory? which are flexible criterias ? Within this consultative report, following we provide some subjective analysis and recommendations, not opposing, but open for further constructive policy discussions with a coherent policy orientation Social entrprises should be a concept, organizational models applied flexibly from from NGOs to traditional businesses Although, in the process of institutionalization of this model, we can create a separate type of business for social enterprises, but social enterprises are not required to register or transfer to this legal form We highly recommend reference to the UK and Thailand’s experiences in this area In fact, for many years, some organisations have 110 Unofficial translation version attempted to separate social enterprises out of NGO but finally, they also have to accept that social enterprises can operate based on an NGO platform In Government policies for social enterprises, the State needs to focus on efficiency and social impacts that social enterprises have created It should be acknowledged that the State support to develop social enterprises, in return, social enterprises assist the State in implementing social objectives Ms Penny Low, founder of Social Innovation Park of Singapore has raised a modern perspective on " national balance sheet" (see below), where the State must effectively manage their "ready available assets", which is human resources, financial capital, infrastructure, natural conditions and policy framework, legislation, and their " liabilities" or in other words it is the function and mandate of the State, including social cohesion, social welfare, social justice, which can be measured and expressed through the Human Development index (HDI) and the national economic competitiveness On that basis, people will be "shared", to benefit from national achievement, under two types of "financial joint-stock” and "Society joint-stock" Notably, in many areas, social enterprises can help the State to implement social objectives (as mentioned previously), it is importan to to emphasize the two superior aspects of social enterprises as follows: - Social enterprises associate with social initiatives As taking a different journey with traditional business, most business solutions of social enterprises are very creative They found materials that was never been used, connecti people who have not been connected, to exploit ignored markets, even creating entirely new markets for new products Therefore, promoting the role of social enterprises is synonymous to effective exploration and use of abundant resources, or potential resources of the society and economy - Social enterprises associate with sustainable solutions Sustainable social solutions are the mission of social enterprises So social enterprirses bring about long-term impact, fundamental changes Such as changing habits, lifestyle, customs and skills In addition, social enterprises can create large impact, which is resonant and widespread Therefore, the State should have policies to exploit and develop these strengths of social enterprises Image 14: Modern perspectives on national balance sheet National Balance Sheet Assets Liabilities Human resources Social linkage Financil capital Social welfare Policies, legal Social faireness 111 Unofficial translation version framework Infrastructure HDI index The natural conditions Competitive advantages Equities Financial equities Social equities Source: Penny Low’s presentation at I-genius Workshop (Thailand, 2012) Social enterprises can belong State onwership In the UK, there is also ongoing debate on this issue While the Minister of Health wants to transfer some health care programmes to social enterprises, many others have opposed this intention In fact, if we have a separate legal framework for social enteprises (similar to the CIC model in the UK ), then public Enterprises, State service units, and Science and Technology Organisations (which had been encouraged to switch into enterprises) can be transferred to operate under social enterprises model However, the key lies with social creativity The strength of social enterprises derived from specific approach "bottom up" Social entrepreneurs established social enterprises base on real deman from local community to address very specific and practical social objectives Meanwhile, representatives of state owners, managers of state organizations are too familiar with the structural dynamics "top-down”, so unlikely to have real creativity However, one of the feasible solutions is to expand the opportunities for social enterprises to participate in equal and transparent bidding, order placing, outsourcing with other organizations of State to carry out State social welfare programmes and public service At present, we've had many legal regulations on this issue, but effectiveness of implementation is still limited Social enterprises are required to have social objectives Social mission must be put at the top This is a key point to distinct social enterprises with other organizations, and it is also the reason for the State to promote the role of social enterprises Business approaches are just solutions and tools of social enterprises However, it is very difficult to measure and evaluates social objectives If criterias for social enterprises are not defined clearly, normal enterprises might evade the law to acclaim themselves as social enterprises to be entitled to incentives from the State Therefore, it is needed to base percentage of profit that is used to re-invest in the development of the organizations and social objectives to identify clearly and transparently the level of the organization's commitment to social enterprises models In Thai case, there is regulation requires more than 50% of profit to be re-invested and social enteprises are assessed at varying levels, respectively Based on above analysis, we propose two options for defining social enterprises in Vietnam as follows: 112 Unofficial translation version "Social Enterprise is an organisational model applying creatively business principles, dynamism and principles of the market to solve specific social issues, in a sustainable way Most profits are re-invested back to the development of the organizations, communities, or social objectives Social enterprises can belong to many different economic sectors " "Social enterprises are organizations established to pursue innovative and sustainable social and environmental solutions using business activities Most profits are reinvested to expand the scope of the organization and social objectives " 2.3.2 Institutionalization of social enterprises in Vietnam Through the study carried out by the research team, we found that social entrepreneurs are simple but strong with internal power They are the people who don’t prefer theories but love to take specific action Most prominently is their passion and willingness to not only overcome difficulties and obstacles that social enterprises are facing, which are always more than normal business, but they also need to be powerful enough to solve conflicts between business and society If they are driven too much by business activities, social objectives might be digressed; vice versa if they were too focus on ocial aspects, social enterprises will be financially unsustainable They immerse themselves in social initiatives with strong desire that we may think that they can operate social enterprises anywhere, in any condition, even in the absence of incentives, support of the State In Indonesia, the social enterprises feel "better" when the State has no incentives support, because the legal environment of this country is still inadequate so implementation of policies are less effective, and always carry with its phenomenon and corruption Therefore, it is necessary to build a consistent perspective of State for social enterprises in the process of policy formulation about the positive role of social enterprises sector as an efficient strategic partner, a powerful tool - "helping-hand" of the State in implementing social objectives Under pressures of reducing public debt, tightening spending, building an efficient government , improving competitive advantages, we can envisage future institutionalisation to include: A compact public sector , efficient + dynamic and growing economic sector + dynamic and growing civil society sector State will only focus in some key functions such as defense, security, foreign affairs, ensure the rule of law, building vital infrastructure, and create policy framework and institution for growth, facilitating science, education, health, economic development For provision of social welfare, addressing social issues and the environment, the state should share responsibility with partners from civil society, in which social enterprises can play a central role The State must also play a 'helping-hand' for these areas by creating a legal framework, providing catalyst conditions for social enterprises development, both in quantity and scale Image 15: State needs to develop the third sector, including social enterprises 113 Unofficial translation version New SEs Source: CSIP It is necessary to issue a decree on social enterprises First, a separate framework should be established for social enterprises and for the operation of social enterprises At this initial stage, we believe that issuing a legal document in a form of Government decree is appropriate This is at the same time, the first brick laid down in the process of institutionalization of social enterprises, and also an exploring stepto prepare legalisation of this sector at a later stage, when social enterprises have massively growed with profound pratical evidences Official recognition by defining social enterprises’ concepts and criteria Decree on social enterprises should give an official definition of social enterprises in Vietnam Criterias on compulsory and flexible characteristics of social enterprises should be clearly defined Through it, issues in terms of positioning social enterprises in private sector or government, belonging to NGO or business, or both, and the possibility of conversion of other type of organisations will also be addressed This is the official recognition of the State for social enterprises, ther result that social enterprises have been longing for When we asked social enterprises about their most desire, what is their top priority for expectation from the state's policy, they all responded that they need an official recognition of the Government and society, to define 'who they are?'; from that stage, they can operate formally with official names and recognised roles Preferential policy, incentives to support social enterprises The decree also needs to offer specific preferential policy, incentives, supports to social enterprises as well as process and responsibilities to apply these policies Here, we need to have an insightful reference to opinions saying that social enterprises should be placed in the general legal frameworks, operating on the same 'playing ground', competing fairly with other organizations, other enterprises The state should only have preferential policy for a certain number of areas, which the State deems necessary to encourage development or entice participation of these organizations Social enterprises will enjoy preferential policies when operating in those areas and this is a general policy, not just for social enterprises This opinion is well worth considering as social enterprises should be viewed closely with their social impact Social enterprise operating at sizes, in many different areas, and therefore not 114 Unofficial translation version every social enterprises can bring about social impact that the State can actually be convinced that incentives are really neccesary Need to establish a department / agency to implement state management, to promote and support social enterprises In term of public administration, the decree may stipulating the establishment of a department/agency within a ministry that is responsible for the administration, encouragement and support of social enterprises Based on the focal nature and cross-sectors of the Ministry of Planning and Investment, we recommend the establishment of a Unit responsible for social enterprises within the structure of the Enterprise Development Department, Ministry of Planning and Investment Another possible option is to set up an Independent organisation in the structure of a state socio-political organisation to carry out assistance programs for social enterprises This is the lessons learned from Thailand However, the tradition of using tools as intermediaries, mixed organisation in Vietnam is still limited and less effective because the independent status of these organizations, instead of having the advantage of being dynamic, it often creates gaps in responsibilities, make it difficulty in gathering resources of stakeholders, especially state agencies and local governments Thus, the first choice is more convincing And to improve the efficiency of their operations, the dedicated agency for social enterprises should implement programs to support social enterprises through a 3rd party which is intermediary organization who can develop social enterprises through open competitive bidding, outsourcing, ordering, while the agency will be responsible for supervision, monitoring and evaluation Supplement to Law and the possibility of converting some units, public organizations Concept, criterias to identify social enterprises need to be added in the revision of the Enterprise Law, Investment Law in the coming time At this stage, it may not be sufficient condition to add a new type of enterprise for social enterprises but this issue should be discussed during the revision of the Law on Enterprises Currently, if considered social enterprise as a organisational model, undertake business activities for social objectives, that can be applied to many different types of organizations both private and state, then non-profit non-state entities, state public service enterprises and scientific and technological organisations which have operated in the form of enterprises (according to state preferential policies) can fully apply social enterprises model without conversion Only when, social enterprises are added as a new type of enterprise, these organization must convert and re-register In case, that social enterprises model is not mandatory, such organizations may not need to convert 2.3.3 Measures to encourage and support social enterprises in Vietnam 115 Unofficial translation version As mentioned above, programmes and policies to encourage, support social enterprises should be done through intermediaries, to achieve greater efficiency thanks to its competition and avoidance of conflicts of interest and corruption Social Enterprises also have the opportunity to feedback directly, objectively to the State management agency in assessing quality and service of these intermediary organisations At the moment, there are two intermediary organisations in Vietnam that are CSIP and Spark It should be noted that intermediary organisations have missions of developing social enterprises They are funded by international NGOs and social investors Therefore, they must also have their own social enterprises networks That will make state and their support programmes more, and the main beneficiaries are social enterprises To encourage, promote growth of social enterprises in Vietnam both in quantity and scale, following policy solutions can be taken into consideration: i Promote communication in various forms ranging from the mass media to supporters, to transmit, disseminate and explain the concepts and issues related to social enterprises; ii Awarding and honoring successful social entrepreneurs who have developed social enterprises in a large scale; iii Organising competition to seeks social enterprise innitiaves to identify potential social entrepreneurs and projects to fund start-up capital in the first stage of establishement; iv Provide direct financial support the social enterprises to expand social impact, through a closely selection, classification, monitoring and evaluating process a Notably, financial instruments here may be non-refundable grants or low interest loans, but apply in a certain time period (3-5 years) to build resilient social enterprises avoiding possible dependence b The financial assistance must be tied to the effectiveness of social impact For example, provide support of 50% of salary for each person with disability employed by social enterprises, decrease gradually in years; provide 50% support to house renting, basic living expenses for teachers involved in vocational training project for young street children, people returned from prisons v In order to develop sustainable financial sources to support social enterprises, a Social Enterprises Development Fund need to be established The Fund will be financed by State budget on the basis of extracting a certain percentage (eg 10%) from the Special sales tax revenues Not only limited by the state budget, the Fund can expand cooperation opportunities to receive funding from voluntary organizations and social investors at home and abroad vi Tax exemptions or reductions for social enterprises in some priority public sectors Some opinions are that as social enterprises have supported or undertook some state's roles in a number of social welfare sector , which the State should have used 116 Unofficial translation version tax revenues to carry deliver their responsibilities, so it will be logical if the State exempt tax for these social enterprises vii It is necessary to standardise, classify and evaluate social enterprises in a consistent, specific, clear, open and transparent set of criterias This is important stage, but also the most difficult for state agencies, because lack of consistent criteria would lead to inequality, legal evasion, conflict of interest; but social impact and the not –profit motif are very difficult to measure Notably, the criterias should be designed reflecting closely social enterprises operation Too high criterias might undermine motivation for social enterprises and will therefore hinder encouragement and attraction of new social enterprises Should develop a system to quantify some kinds of social impact that social enterprises generated, to compare with investment costs, opportunity costs and efficiency gain The application of financial audit and social audit should also be applied more widely viii Support for capacity building, training of business management skills, finance, personnel, marketing for social enterprises; ix Need to develop and pay attention to the role of intermediary organizations, encourage social investors; may establish an Association of social enterprises in Vietnam; depth consultation with these organisations in the process of making policy to social enterprises; x Need to conduct public competitive bidding so that social enterprises can participate in providing products and public services, such as waste disposal, environmental protection, education, public health, sustainable livelihoods xi May adopt policies regulating state agencies, public sector organizations to prioritize the usage of products and services of social enterprises when making public procurement or outsourcing; xii Social enterprises should be encouraged and facilitated to access information, state infrastructure or used at preferential rates; xiii Developing ground for social enterprises to rent cheaply to set up office, training, practice, sales venue xiv Implementation of social housing programs follow social enterprises model; xv Development of various types of cooperatives, micro finance towards ensuring democracy and fairness in organizational management and distribution of profits to the community; xvi Develop networks and facilitate connection between social enterprises, and intermediaries, social investors in and out the country Social enterprises are facilitated to participate in high-level missions overseas, participation in fairs, exhibitions, product introduction, registration contacts, information and data for the promotion of foreign trade; 117 Unofficial translation version xvii Develop training programs at the undergraduate level and post graduate on social enterprises Establish social enterprises incubating model at universities Promote common knowledge of social enterprises and student movement encouraging young people to raise their dream of starting their career with social enterprises 118 Unofficial translation version CONCLUSION In fact, in the last 10 years, Vietnam has actively implemented socialization in education and health This demonstrates a change in the perception of the State on sharing a number of areas which have been considered as inclusive responsibility of the State with non-state entities consisting mainly private enterprises and non-public organisations However, it is apparent that we don’t have a comprehensive methodology for socialization Consequently, in many places, socialization have been converted to intensed marketization; leading to chaotic competition, lacking of standardised and effective management system, poor services and decrease of trust in the roles of the State as well as the market In another aspect, a change in perception has been documented in the administrative reform of the public sector The State encourages public services organizations to transform into Enteprise model, State Science and Technology organizations have been converted into Science and Technology enterprises, create opportunities for private sector and non-state organisations to involve in providing public services through competitive tendering to achieve greater efficiency This shows that the State is in agreement a trend of applying business models, market principles for the implementation of its social functions However, there are many areas that have not been socialized, or can not be socialize under traditional approach (because it is not attractive to private sectors in term of potential profit) These areas include job creation for disadvantages or marginalizedgroups In addition, there are many other issues, such as: support for children with special circumstances and reintegrate people released from prison, people living with HIV/AIDS, protection of ecological environment In fact, Implementation of policy on transforming some public services organisations, Science and Technology organisations into business and expanding markets to provide public services have not gained significant progress It is clearly that it will not be adequate to rely on the two public and private sectors to fulfill demands and to solve social issues That's not to mention economic down-turn, requirement on restructuring, reducing public debt, State fiscal tightening at the present, while the grants from International organisations for Vietnam is declining gradually In this context, we see the role of social organizations, community development in general and particularly the emergence of social enterprises are very suitable to fill the gap Social enterprises are hybrid organisations, undertaking business activities to achieve social objectives They operate not for profit In fact, social enterprises are catalyst that promote innovation and initiatives for the society They go into the niche market which no one have entered They even create new market, or meet the needs of a neglected group, or address the social and environment isses have arisen during the economic growth of the country The social entrepreneurs hold high interests in social issues; particularly they have to overcome many difficulties and obstacles in order to maintain social enterprises model in order to compromise between the sustainable objectives and extreme challenges of the market We can say that this is a 'piece of zigsaw' which is missing in a picture that has the place in the public sector, private enterprises and NGOs This is a 'win-win' partnership, provided invaluable support to the State in the implementation of social objectives Each of the above 119 Unofficial translation version area has its own advantages and strengths, however, social enterprises can be seen as solutions or tools to complement the weaknesses of the remaining areas including the promotion of social initiatives, mobilising potential resource both intellectually and physically from the people, promoting effectiveness and sustainability of social measures It's time, the State had an official recognition of social enterprises model and the role of social entrepreneurs Mechanisms and policies need to be developed to create a stable legal framework for the operation of social enterprises, creating favorable condition for social initiatives to be implemented easily, encourage and promote the strong growth of social entrepreneurship in Vietnam 120 Unofficial translation version REFERENCES Charles Leadbeater, Social enterprises and social innovation: strategies for the next ten years, 2007 C.K Prahalad, The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits, Wharton School Publishing, 2010 CSIP, British Council Vietnam, Sparks: Mapping excercise report on social enterprises in Vietnam 2011 CSIP – InvestConsult – MSD, Handbook on legal framework for entrepreneurs and social enterprises - 2010 David Bornstein, How to change the world: Social Enterpreneurs and the Power of New Ideas, Oxford University Press, 2007 Ed Humpherson, PPP, Social Enterprise and lessons from the Private Financial Innitiative, National Audit Office, at OECD workshop on PPP, Paris, March 2011 Elkington J., Hartigan P., The strength of outstanding people - Sức mạnh người phi lý, Labour- Social Publishing House, 2008 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